- On Monday, January 30, Apple stock had its second-worst day of market performance so far in 2023. Shares were down 2%.
- Analysts continue to adjust their fiscal Q1 estimates lower ahead of earnings day. The bearish trend could continue over the next couple of days.
- Follow the Cupertino company’s fiscal Q1 earnings event on this channel in real-time, via live blog, on February 2, starting at the closing bell.
Figure 1: Apple Stock Takes The Last Few Jabs Before Earnings
thanat sasipatanapa / Shutterstock.com
AAPL Hit By More Estimate Cuts
As I wrote this sentence on Monday, January 30, Apple stock (AAPL) had been heading 2% lower for the day. This represented a loss of market cap of $50 billion in just a few trading hours.
The most likely culprit for the bearish move was a research report published by Wells Fargo’s Aaron Rakers. According to it:
“Overall demand push-out vs. weakening consumer demand […] and uncertainties over the pace of a post-COVID China lock-down recovery leave us with an incrementally cautious stance through 2023.”
The analyst cut his annual projections and set the key metrics below the consensus: “2023 and 2024 earnings per share [are now] estimated to be $5.81 and $6.50, down from a prior view of $6.56 and $7.77, respectively.”
Wells Fargo’s downbeat report comes only a few days after Deutsche’s own bearish take on Apple’s earnings season. In that case, analysts Sidney Ho and Ross Seymore lowered their 2023 EPS estimates by 20 cents due to “a more cautious standing on consumer spending.”
Apple And The Estimate Cuts
The string of estimate cuts by Wall Street pros was not too hard to anticipate. As I argued on this channel early in December:
“Things are not looking very promising over the next month or two. The problem: Apple’s supply chain issues in China [are] the gift that keeps on giving, analysts continue to double-click on this hot topic and lower their holiday quarter estimates.”
From the publication of that article through the end of 2022 (see below, chart provided by Stock Rover), Apple stock underperformed the S&P 500 and the Nasdaq by 6 and 4 percentage points, respectively, over a short period. Shares have partially recovered in 2023.
Figure 2: AAPL vs. S&P 500 and Nasdaq-100.
stock rover
Recent bearishness seems to be related to a two-month-old topic. The difference this time is that supply chain constraints are not the only concerns.
According to both Well Fargo and Deutsche, the state of the global economy is a problem that could weigh on demand for Apple’s products and services.
This is an understandable take, considering that most experts see a recession lurking on the horizon. Caution, however, still contradicts what Apple’s own management team sees in the field. In the most recent earnings call, CEO Tim Cook said, about the iPhone:
“Customer demand was strong and better than we anticipated that it would be. […] We feel very good about how we performed in Q4.”
Could Apple Stock Slide Further?
Apple is a widely covered stock on Wall Street. I still expect to see earnings previews come out ahead of February 2 – and I doubt that the tone of those reports will be very constructive.
Therefore, I would not be surprised to see AAPL head even lower between Tuesday and the end of Thursday’s regular trading session, driven by negative sentiment.
However, any weakness could be temporary. Apple’s earnings print and guidance, plus the developments on the monetary policy front, are likely to be more important stock price movers by the end of the week.
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Wall Street continues to revise Apple’s fiscal Q1 P&L figures ahead of earnings day, which has put some pressure on the stock. Are analysts being too pessimistic about the Cupertino company’s holiday quarter results?
(Read more from Apple Maven: Apple’s Q1 Earnings: This Segment Needs To Rebound Fast)
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting the Apple Maven)
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